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Tourism helped Iceland recover from crash, but some residents have had enough

Tourism is Iceland's second-most-important industry and accounts for about half of the jobs created since 2010.

According to Icelandic financial institution Islandsbanki, every fifth person in the country is a tourist during the summer. (Dreamstime)

By Theresa MuenchDPA

Fri., Nov. 10, 2017

REYKJAVIK, ICELAND—Though a steady stream of tourists has been a blessing for Iceland after the financial crash a decade ago, signs are emerging that local inhabitants are beginning to tire of the influx, an industry assessment said.

“We are seeing some signs that the tolerance is getting lower, especially in the most popular areas,” said Helga Arnadottir, director of the Icelandic Tourism Industry Association.

As tourism is the North Atlantic island’s second-most-important industry, this is something to take seriously, she said.

“This is the biggest threat — the tolerance of the inhabitants,” Arnadottir said.

According to Arnadottir, tourism was a lifesaver for Iceland after the severe 2008 financial and banking crisis. Since 2010, the number of visitors has more than quadrupled in the small country of 330,000 people.

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And this year, financial institution Islandsbanki forecasts about 2.3 million visitors — a 30-per-cent increase over 2016.

According to Islandsbanki, every fifth person in the country is a tourist during the summer. In September, the national statistics office counted 378,300 overnight visits, with Germans being the most frequent visitors, followed by Americans.

“Most Icelanders are still positive about tourism and understand its importance,” Arnadottir said.

She suggested, however, that the industry may need to set some limits, saying that questions have to be answered as to the number of buildings in Reykjavik to be converted into hotels, the number of restaurants to be built and the number of apartments to be rented out.

“These decisions must be made by the government,” she said.

Locals complain mainly about vandalism, the introduction of entrance fees for national parks, price increases and hotel construction sites.

And there have been weeks of discussion over the past year about the lack of public toilets that has forced tourists to use shrubbery and other public spaces instead.

On the positive side, tourism has enriched Iceland’s quality of life in some respects, said Arnadottir, noting that there are restaurants all over the country where there were once only hotdog kiosks.

The aim of government and industry for visitors to come all year — even in the dark winter. And that they would travel all over the country — not just to the southwest around the capital, Reykjavik.

But the government must be more involved for this to happen, Arnadottir said.

“The infrastructure like roads needs to be strengthened for this industry,” she said, citing the need for roads to tourist destinations to be safe and passable even in winter.

According to Islandsbanki, tourists account for almost 40 per cent of Iceland’s foreign exchange income. Each visitor contributes about $1,860 (U.S.) to the domestic economy.

Half of the jobs created since 2010 are directly or indirectly related to tourism.

Further risks to Icelandic tourism over the past two years have been the unstable political situation and the exchange rate of the Icelandic krona, the head of the tourist association said.

“The tourists do not stay so long because it is expensive,” Arnadottir said.

Statistics suggest that in 2015 the prices for overnight stays and meals were 44 per cent above the European Union average. Arnadottir therefore expects the tourism boom to weaken soon and settle into “normal growth” of 3 per cent to 5 per cent.

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